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$199 Unsubsidized Verizon LTE Tablet Changes the Game

The WiFi-only version of the Nexus 7 was launched on June 27, 2012, and much progress has been made in terms of cost reduction, even outside this future single-mode LTE development. Considering Apple's $130 LTE premium on the iPad, the new single-mode LTE premium may be only $30. That's $100 net, taking the price down from $299 to $199. Further reductions may be possible this year as well.

For reference, you can also buy a
Samsung seven-inch LTE tablet at Verizon today for $299, but it is running the now-obsolete Android 4.0 operating system and there is no clear upgrade path announced. Apple charges a relatively whopping $459 for its LTE version of the 7.9 inch iPad Mini.

Conclusion No. 1:De facto 100% LTE coverage at 700 MHz means Verizon could save a ton of money ditching Qualcomm in favor of single-mode LTE. This will happen in tablets first, because voice-over-IP is not yet mature in the cellular world -- although that is coming soon, too, spreading this development to the smartphones.

Conclusion No. 2: In the near term, this could help Google at the expense of Apple -- assuming that this first tablet is Android instead of iOS. In principle, though, there is no reason Apple couldn't respond with the same coin. It would be painful for Apple to try to sell its LTE Tablet for $459 when an equivalent Android version would be sold for $199 or even less.

Conclusion No. 3: Qualcomm could be in big trouble. This is contradictory from the perspective that everyone in the industry knows that Qualcomm makes the best products, and has been in this pole position for years. This single-mode LTE trend could mean that Qualcomm's pricing could fall through the floor because Qualcomm would to have to sell a much cheaper product.

Conclusion No. 4: This kind of LTE-only tablet for Verizon could be the first to have a non-Qualcomm LTE chip, the first one to do so. I don't know this, but it seems logical if Verizon wants to break Qualcomm's back.

The bottom line: This development would be incrementally negative for Qualcomm, positive for Verizon, short-term slightly positive for Google, short-term slightly negative for Apple, Microsoft and BlackBerry. Longer term, single-mode LTE also means VoIP (Voice over IP), which in turns means Google taking over the voice/SMS business at the expense of the carriers such as Verizon and AT&T.

In other words, a relatively short-term victory for Verizon could turn into a longer-term nightmare. The only clear winner -- short-term and long-term -- remains Google.

Specific prediction: Verizon -- and perhaps other carriers in due course -- will launch single-mode LTE tablets priced at $199 or lower, unsubsidized, contract-free, in 2013.

At the time of publication, the author was long GOOG, AAPL and QCOM, and had a short position in MSFT.

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